Pacific Mercantile Bancorp Amends Existing Equity Financing Agreements With the Carpenter Funds to Increase the Common Stock and Reduce the Preferred Stock to be Purchased by the Carpenter Funds

Pacific Mercantile Bancorp

announced today that the agreements entered into on August 26, 2011 with Carpenter Community BancFund LP and Carpenter Community BancFund-A LP (collectively, the "Carpenter Funds") for the second round of its previously reported equity financing have been amended to terminate the sale of $10.8 million of additional shares of preferred stock and, correspondingly, increase by $10.8 million the amount of common stock that the Carpenter Funds will be purchasing from the Company. As a result of these changes, the Company expects to save approximately $907,200 annually in preferred stock dividends and increase its Tier 1 capital. As previously reported, on August 26, 2011, the Company sold $11.2 million of a newly created class of preferred stock, designated as the Series B Convertible 8.4% Preferred Stock (the "Series B Shares"), including $3.7 million to the Carpenter Funds. On that same date, the Company and the Carpenter Funds entered into two additional stock purchase agreements: (i) an Additional Series B Preferred Stock Purchase Agreement (the "Additional Series B Purchase Agreement") which provided for the sale to the Carpenter Funds of an additional $10.8 million of Series B Preferred Stock (the "Additional Series B Shares"), at a purchase price of $100 per share, and (ii) a Common Stock Purchase Agreement, which provided for a sale to the Carpenter Funds of $15.5 million of shares of Company common stock ("Common Shares"), at a purchase price equal to $5.31 per share or, if greater, the per share book value of the Company's common stock last reported prior to the closing of that sale of Common Shares, in each case subject to the satisfaction of certain conditions. Among other things, as holders of the Additional Series B Shares, the Carpenter Funds would have been entitled to receive dividends, as and when declared, totaling approximately $907,200 each year in cash or, if not so declared and paid, in additional shares of preferred stock, and to convert, at their option, their Additional Series B Shares, at a conversion price of $5.32 per share, into a total of 2,030,075 shares of Company common stock.